Posted: 11/2/2010 3:13:56 PM EDT
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I am supposed to figure out fixed cost, variable cost, and total cost. It costs $20 a day of fixed costs, and each unit of labor costs $20 dollars. So for my fixed costs, I would do my $20 + the cost of each additional unit of labor right, or am I over thinking it and it is just $20 dollars in fixed costs for the whole table. While variable cost would be the cost of each additional unit of labor and total costs are variable+ fixed.
Thanks |
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Quoted:
F+(X*C)? So, $20+(Variable X * $20)? I'm not sure I follow? I am given a table and I calculated the MPL but I am supposed to find the fixed cost. Fixed costs are $20 per day while each employee earns $20 per day. So for fixed costs I don't include employee wages in that I wouldn't think and just use 20 for the entire fixed costs, and then variable costs are employees X 20. Total cost is variable + fixed? |
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Think of it like this. Your building a doghouse. The wood and nails are your fixed costs ($20). No matter how fast or slow you build it your materials cost the same. Your time or days are $20 each per person to build it. So if you build it in two days with one laborer your variable costs would be $40 ($20 x 2 days) which makes your total cost $60. I preach this to my foremen all the time. Materials are what they are in your budget. Equpiment and labor are what you can control to make or break your budget. |